The credit approval process has a lot of complexity to it, but if you boil it down to its core function it really is meant to define and identify risk. The process itself is designed to help facilitate risk-based credit decisions. Based on your risk assessments, you are able to approve low-risk customers so you can improve and maximize profitability. The process also allows you to review your medium-risk customers where you can apply a higher level of caution and manually review them to see if there are opportunities for approval. At the same time, this process helps you decline high-risk customers where you may offer cash on demand terms or credit card offers to hedge against your risk.

There are market drivers internally and externally that impact the credit approval process. And they are identifiable in the credit and risk data that business creditors use to fuel their decisioning. Yet, we still find clients who solely rely on a manual review of credit reports. But that is not always thorough nor efficient – especially today.

Here are three steps to modernize your credit approval process:

• Adopt a credit scoring strategy – When using a score value, you can better quantify and build risk around that value. It also allows you to avoid slow, manual evaluations and have your resources focus on medium-risk applicants. Custom score models can even be provided based upon your unique customer portfolio.

• Automate decision policies – There is software that allows you to automate the data process and incorporate scores – even unique scores – to drive those decision parameters. This allows companies to turn risk assessment into an action strategy, reduce turnaround and increase processing capacity.

• Process online applications – You can link the backend piece with your online application process. There are tools that allow companies to easily do this and quickly build and deploy online forms. Little to no IT resources are required. Once the application is taken, the data is retrieved and linked to your decision-making platform.

Companies that already have existing processes and systems may want to leverage an API connection. An API enables the integration of data and services between systems and allows companies to avoid redundant systems, logins and security risks.

When it comes to revamping the credit approval process, it’s important for business creditors to start small and look at where they can potentially make enhancements. Seeking out the right partner, like Xactus, is a great way to ensure your straight path to modernization.